Roberts Realty Investors, Inc. Reports Financial Results For Third Quarter 2003 ATLANTA, Nov. 6 /PRNewswire-FirstCall/ -- Roberts Realty Investors, Inc.
reports that its financial results for the quarter ended September 30, 2003
included net income of $5,269,000, or $1.01 per share, compared to a net loss of
$1,041,000, or $0.21 per share, during the same period a year ago. For the nine
months ended September 30, 2003, net income was $3,459,000, or $0.67 per share,
compared to a net loss of $2,559,000, or $0.52 per share, during the nine months
ended September 30, 2002. Results for the three and nine months ended September
30, 2003 include a gain on the sale of the company's Highland Park community of
$6,070,000, or $1.17 per share, net of minority interest of $2,432,000. This
gain is included in income from discontinued operations in the accompanying
consolidated statements of operations. During all periods, results include
depreciation, a non-cash expense, recorded on the company's real estate assets
as required by generally accepted accounting principles (GAAP). Funds From
Operations (FFO) increased 86.7% from $279,000 or $0.04 per share during the
quarter ended September 30, 2002 to $521,000 or $0.07 per share during the
quarter ended September 30, 2003. FFO for the nine months ended September 30,
2003 was $1,586,000, or $0.22 per share, a 2.9% increase from FFO of $1,542,000,
or $0.21 per share, for the nine months ended September 30, 2002. A
reconciliation of FFO to GAAP net income (loss) is included in the financial
data accompanying this press release.
The following tables compare the company's financial results for the three and
nine months ended September 30, 2003 to the three and nine months ended
September 30, 2002. See the footnotes, the reconciliation of net operating
income to GAAP net income (loss) and the reconciliation of FFO to GAAP net
income (loss) accompanying this press release.
For The Three Months Ended
Sep 30, 2003 Sep 30, 2002 % Change Operating Revenues $4,916,000 $4,164,000 18.1%
Property Operating
Expenses (1) $1,955,000 $1,860,000 5.1%
Net Operating
Income ("NOI")(2) $2,961,000 $2,304,000 28.5%
Net Income (Loss) $5,269,000 $(1,041,000) 606.1%
Net Income (Loss)
Per Share (3) $1.01 $(0.21) 606.1%
Funds From Operations (4) $521,000 $279,000 86.7%
FFO Per Share (5) $0.07 $0.04 86.7%
NOI Margin (6) 60.2% 55.3% 4.9%
Average Shares and
Units Outstanding 7,224,517 7,220,324 0.1%
For The Nine Months Ended
Sep 30, 2003 Sep 30, 2002 % Change Operating Revenues $14,281,000 $12,380,000 15.4%
Property Operating
Expenses (1) $5,608,000 $5,077,000 10.5%
NOI (2) $8,673,000 $7,303,000 18.8%
Net Income (Loss) $3,459,000 $(2,559,000) 235.2%
Net Income (Loss)
Per Share (3) $0.67 $(0.52) 235.2%
Funds From Operations (4) $1,586,000 $1,542,000 2.9%
FFO Per Share (5) $0.22 $0.21 2.9%
NOI Margin (6) 60.7% 59.0% 1.7%
Average Shares and
Units Outstanding 7,223,969 7,220,774 0.1% The results of the company's Highland Park community, which the company sold on
August 6, 2003, are reflected as income from discontinued operations in the
accompanying consolidated statements of operations. Highland Park is reflected
as assets and liabilities held for sale in the accompanying consolidated balance
sheets.
The increase in revenue, operating expenses, NOI and FFO during 2003 is due to
the completion of the lease-ups at the company's Veranda Chase and Addison Place
apartment communities. The Veranda Chase apartment community lease-up was
completed in June 2003, and the Addison Place apartment community lease-up was
completed in September 2002.
Same-property financial highlights, excluding Highland Park, for the quarter
ended September 30, 2003 compared to the same period a year ago are as follows: For The Three Months Ended
Sep 30, 2003 Sep 30, 2002 % Change Operating Revenues $2,328,000 $2,383,000 (2.3%)
Property Operating
Expenses (1) $940,000 $905,000 3.9%
NOI (2) $1,388,000 $1,478,000 (6.1%)
NOI Margin (6) 59.6% 62.0% (2.4%)
Physical Occupancy (7) 93.1% 92.4% 0.7%
Average Monthly Rent $929 $965 (3.7%) Same-property financial highlights, excluding Highland Park, for the nine months
ended September 30, 2003 compared to the same period a year ago are as follows: For The Nine Months Ended
Sep 30, 2003 Sep 30, 2002 % Change Operating Revenues $6,942,000 $7,157,000 (3.0%)
Property Operating
Expenses (1) $2,605,000 $2,599,000 0.2%
NOI (2) $4,337,000 $4,558,000 (4.8%)
NOI Margin (6) 62.5% 63.7% (1.2%)
Physical Occupancy (7) 91.6% 91.5% 0.1%
Average Monthly Rent $942 $976 (3.5%) The tables above summarize the financial results for the company's four
apartment communities that were stabilized for the three and nine months ended
September 30, 2003 and the three and nine months ended September 30, 2002.
In commenting on the third quarter results, Mr. Charles S. Roberts, the
company's Chief Executive Officer, stated, "The difficult apartment market
continues to impact our stabilized communities. Although we were able to
increase physical occupancy to 93.1% during the third quarter of 2003 from 90.6%
during the second quarter of 2003, increases in market-driven rent concessions
have negatively impacted our results. Despite this unfavorable apartment market
we had a very productive third quarter. We completed the sale of our Highland
Park community on August 6, 2003, which resulted in net cash proceeds to the
company of $6.9 million. As a result of the sale of Highland Park, we made a
special distribution to shareholders of $0.55 per share on August 27, 2003.
Also during August, we completed the refinancing of our River Oaks community
which resulted in net cash proceeds to the company of $2.1 million." Mr. Roberts concluded, "We are pleased that in addition to significantly
improving our financial position during the third quarter we were also able to
make a distribution to our shareholders. We continue to experience an adverse
apartment market that is showing no signs of sustainable improvement. We
believe these unfavorable conditions will continue through the rest of 2003 and
into 2004. In spite of the slow apartment market, the fourth quarter of 2003
will be a very busy time for our company. We are excited about the opening of
our newest community in Charlotte, North Carolina. Within the next 60 to 90
days, this 319-unit community will be substantially complete and move-ins will
begin. We also anticipate completion of our Addison Place retail center and
Northridge office building during the fourth quarter of 2003." This press release contains forward-looking statements within the meaning of the
securities laws. Although the company believes the expectations reflected in
the forward-looking statements are based on reasonable assumptions, the
company's actual results could differ materially from those anticipated in the
forward-looking statements. Certain factors that might cause such a difference
include, but are not limited to, the following: occupancy rates and rents may
continue to be adversely affected by local economic and market conditions in the
company's markets in Atlanta, Charlotte, and Palm Beach; the company's markets
may become overbuilt with multifamily apartments; construction costs of a new
community may exceed original estimates; construction and lease-up of the
company's new properties in Atlanta and Charlotte may not be completed on
schedule; and, financing may not be available or, if available, not on favorable
terms. For more information about some of these risks and uncertainties, please
see the section in Roberts Realty's most recent quarterly report on Form 10-Q
entitled Management's Discussion and Analysis of Financial Condition and Results
of Operations - Disclosure Regarding Forward-Looking Statements.
Notes to financial data above:
Note 1: Property operating expenses are comprised of personnel, utilities,
real estate taxes, insurance, maintenance, landscaping, marketing, and
property administration expenses.
Note 2: Net operating income is equal to operating revenues minus property
operating expenses. Net operating income is a widely recognized term in
the real estate industry, and we believe it provides useful information to
investors regarding our results of operations because it explains the
contribution of our rental operations to our overall financial results. A
reconciliation of net operating income to GAAP net income (loss) is
included in the financial data accompanying this press release.
Note 3: Net income (loss) per share is calculated using weighted average
common shares of 5,195,129 shares and 5,156,597 shares for the three and
nine months ended September 30, 2003, respectively, and 4,931,425 shares
and 4,921,298 shares for the three and nine months ended September 30,
2002, respectively.
Note 4: Funds from Operations, or FFO, is defined by the National
Association of Real Estate Investment Trusts (NAREIT) as net income (loss)
computed in accordance with generally accepted accounting principles,
excluding gains or losses from debt restructuring and sales of property
and non-recurring items, plus real estate related depreciation and
amortization. The company believes that FFO is an important measure of
operating performance and that FFO provides useful information to
investors because it is a widely accepted financial indicator used by
certain investors and analysts to analyze and compare one equity REIT with
another on the basis of operating performance. The company computes FFO
in accordance with the current NAREIT definition, which may differ from
the methodology for calculating FFO utilized by other equity REITs and,
accordingly, may not be comparable to those other REITs. FFO does not
represent amounts available for management's discretionary use for payment
of capital replacement or expansion, debt service obligations, property
acquisitions, development and distributions or other commitments and
uncertainties. FFO should not be considered as an alternative to net
income (loss) (determined in accordance with GAAP) as an indication of our
financial performance or cash flows from operating activities (determined
in accordance with GAAP) as a measure of our liquidity, nor is it
indicative of funds available to fund our cash needs, including our
ability to make distributions. The company believes that to gain a clear
understanding of our operating results, FFO should be evaluated in
conjunction with net income (loss) (determined in accordance with GAAP).
Note 5: FFO per share is calculated using weighted average common shares
(diluted) of 7,224,517 shares and 7,223,969 shares for the three and nine
months ended September 30, 2003, respectively, and 7,220,324 shares and
7,220,774 shares for the three and nine months ended September 30, 2002,
respectively.
Note 6: NOI margin equals NOI divided by operating revenues.
Note 7: Physical occupancy represents the average occupancy of our
stabilized properties calculated by dividing the total number of vacant
days by the total possible number of vacant days for each period and
subtracting the resulting number from 100%. ROBERTS REALTY INVESTORS, INC. CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
September 30, December 31,
2003 2002
(Unaudited)
ASSETS
REAL ESTATE ASSETS - At cost:
Land $20,411 $20,482
Buildings and improvements 118,698 118,511
Furniture, fixtures and equipment 13,368 13,072
152,477 152,065
Less accumulated depreciation (29,308) (24,437)
Operating real estate assets 123,169 127,628
Construction in progress
and real estate under development 42,681 35,015 Net real estate assets 165,850 162,643 CASH AND CASH EQUIVALENTS 9,099 5,542
RESTRICTED CASH 343 309 DEFERRED FINANCING COSTS - Net of
accumulated amortization of
$651 and $668 at September 30,
2003 and December 31, 2002, respectively 1,213 1,191 ASSETS HELD FOR SALE - 8,570
OTHER ASSETS - Net 494 752 $176,999 $179,007 LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Mortgage notes payable $94,307 $92,834
Construction notes payable 38,101 27,891
Land notes payable 3,000 6,700
Swap contract liability 3,890 4,813
Accounts payable and accrued expenses 2,128 2,178
Due to Roberts Construction (including
retainage payable of $940 and
$1,122 at September 30, 2003 and
December 31, 2002, respectively) 1,479 2,258
Security deposits and prepaid rents 420 413
Liabilities related to assets held for sale - 10,080 Total liabilities 143,325 147,167 COMMITMENTS AND CONTINGENCIES MINORITY INTEREST OF UNITHOLDERS
IN THE OPERATING PARTNERSHIP 9,361 9,361 SHAREHOLDERS' EQUITY:
Preferred shares, $.01 par value,
20,000,000 shares authorized, no shares
issued and outstanding - -
Common shares, $.01 par value, 100,000,000
shares authorized, 5,578,959 and 5,459,391
shares issued at September 30, 2003 and
December 31, 2002, respectively 56 55
Additional paid-in capital 25,987 25,408
Less treasury shares, at cost (362,588
shares at September 30, 2003 and
December 31, 2002) (2,764) (2,764)
Unamortized restricted stock compensation (79) (139)
Retained earnings 3,922 3,317
Accumulated other comprehensive loss (2,809) (3,398)
Total shareholders' equity 24,313 22,479 $176,999 $179,007
ROBERTS REALTY INVESTORS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts) Three Months Ended Nine Months Ended
September 30,
September 30,
2003 2002 2003 2002
(Unaudited)(Unaudited) (Unaudited)(Unaudited) OPERATING REVENUES:
Rental operations $ 4,618 $3,923 $ 13,420 $11,664
Other operating income 298 241 861 716 Total operating revenues 4,916 4,164 14,281 12,380 OPERATING EXPENSES:
Personnel 542 520 1,467 1,336
Utilities 297 292 867 809
Repairs, maintenance
and landscaping 347 282 924 807
Real estate taxes 472 475 1,508 1,361
Marketing, insurance and
other 297 291 842 764
General and administrative
expenses 535 561 1,618 1,575
Depreciation of real
estate assets 1,586 1,671 5,086 4,764 Total operating expenses 4,076 4,092 12,312 11,416 INCOME FROM OPERATIONS 840 72 1,969 964 OTHER INCOME (EXPENSE):
Interest income 23 8 55 30
Interest expense (1,898) (1,600) (5,703) (4,586)
Loss on disposal of assets (10) (12) (21) (23)
Amortization of deferred
financing costs (80) (71) (225) (239) Total other expense (1,965) (1,675) (5,894) (4,818) LOSS BEFORE MINORITY
INTEREST AND GAIN (LOSS)
ON SALE OF REAL
ESTATE ASSETS (1,125) (1,603) (3,925) (3,854) MINORITY INTEREST OF
UNITHOLDERS IN THE
OPERATING PARTNERSHIP 316 508 1,123 1,226 LOSS BEFORE GAIN (LOSS)
ON SALE OF REAL
ESTATE ASSETS (809) (1,095) (2,802) (2,628) GAIN (LOSS) ON SALE OF
REAL ESTATE ASSETS, net
of minority interest of
unitholders in the
operating partnership - - 77 (102) LOSS FROM CONTINUING
OPERATIONS (809) (1,095) (2,725) (2,730)
INCOME FROM DISCONTINUED
OPERATIONS, net of minority
interest of unitholders
in the operating
partnership 6,078 54 6,184 171 NET INCOME (LOSS) $5,269 $(1,041) $3,459 $(2,559)
INCOME (LOSS) PER COMMON
SHARE - BASIC AND DILUTED: Loss from continuing
operations $(0.16) $(0.22) $(0.53) $(0.55)
Income from
discontinued operations 1.17 0.01 1.20 0.03
Net income (loss) $1.01 $(0.21) $ 0.67 $(0.52) Weighted average
common shares
- basic 5,195,129 4,931,425 5,156,597 4,921,298 Weighted average
common shares
- diluted (effect
of operating
partnership units) 7,224,517 7,220,324 7,223,969 7,220,774
ROBERTS REALTY INVESTORS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands) Nine Months Ended
September 30,
2003 2002
(Unaudited) (Unaudited)
OPERATING ACTIVITIES:
Net income (loss) $3,459 $(2,559)
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities of continuing operations:
Income from discontinued operations,
net of minority interest (6,184) (171)
Minority interest of unitholders
in the operating partnership (1,123) (1,226)
(Gain) loss on sale of real estate assets (77) 102
Loss on disposal of assets 21 23
Depreciation and amortization 5,311 5,003
Amortization of deferred compensation 38 58
Change in assets and liabilities:
Increase in restricted cash (34) (9)
Decrease (increase) in other assets 258 (28)
(Decrease) increase in accounts payable
and accrued expenses relating to operations (50) 1,122
Increase (decrease) in security deposits
and prepaid rent 7 (25) Net cash provided by operating
activities from continuing operations 1,626 2,290
Net cash provided by operating
activities from discontinued operations 377 574
Net cash provided by
operating activities 2,003 2,864 INVESTING ACTIVITIES:
Proceeds from sale of real estate assets 7,313 -
Acquisition and construction of
real estate assets (9,475) (15,536) Net cash used in investing activities (2,162) (15,536) FINANCING ACTIVITIES:
Proceeds from mortgage notes payable 10,750 22,500
Payoff of mortgage notes payable (8,487) -
Principal repayments on mortgage notes payable (852) (752)
Payoff of land notes payable (3,700) (1,300)
Payment of loan costs (248) (290)
Proceeds from construction loans 10,210 15,161
Payoff of construction loan - (22,500)
Proceeds from lines of credit - 802
Payoff of line of credit - (2,002)
Payment of dividends and distributions (3,957) - Net cash provided by financing activities 3,716 11,619 NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,557 (1,053)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,542 2,617
CASH AND CASH EQUIVALENTS, END OF PERIOD $9,099 $1,564 SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid for interest $7,322 $6,672
ROBERTS REALTY INVESTORS, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(Dollars in Thousands)
Reconciliation of Net Income (Loss) to Funds From Operations Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(Unaudited) (Unaudited) (Unaudited) (Unaudited) Net income (loss) $ 5,269 $ (1,041) $ 3,459 $(2,559)
Minority interest of
unitholders
- continuing
operations (316) (508) (1,123) (1,226) Minority interest of
unitholders
- discontinued
operations 3 25 45 80
Loss on disposal of
assets 8 12 19 25
(Gain) loss on sale of
real estate assets, net
of minority interest - - (77) 102
Gain on sale of Highland
Park, net of minority
interest (6,070) - (6,070) - Depreciation expense
- continuing operations 1,586 1,671 5,086 4,764 Depreciation expense
- discontinued
operations 41 120 247 356 Funds From Operations $521 $279 $ 1,586 $1,542
Reconciliation of Net Operating Income to Net Income (Loss) Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Operating revenues $ 4,916 $4,164 $ 14,281 $12,380
Property operating
expenses 1,955 1,860 5,608 5,077 Net operating income 2,961 2,304 8,673 7,303 Interest expense (1,898) (1,600) (5,703) (4,586)
General and
administrative expenses (535) (561) (1,618) (1,575)
Depreciation and
amortization (1,666) (1,742) (5,311) (5,003)
Interest income 23 8 55 30
Loss on disposal of assets (10) (12) (21) (23)
Gain (loss) on sale of
real estate assets - - 77 (102)
Minority interest of
unitholders 316 508 1,123 1,226
Income from discontinued
operations 6,078 54 6,184 171 Net income (loss) $5,269 $(1,041) $ 3,459 $ (2,559)
DATASOURCE: Roberts Realty Investors, Inc.
CONTACT: Gregory D. Fletcher, Chief Financial Officer of Roberts Realty Investors, Inc., +1-770-394-6000, or fax, +1-770-551-5914
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